The Newport Gwent Dragons have confirmed that Dan Lydiate will leave the region at the end of the season to take up a contract with an "undisclosed European team".

Welsh flanker Lydiate, who was the 2012 Six Nations Player of the Tournament, has been heavily linked with Top 14 big spenders Racing Metro. He is currently sidelined after suffering a serious ankle injury earlier this season that ruled him out of Wales' entire autumn schedule of Tests against Argentina, Samoa, New Zealand and Australia.

Dragons rugby director Robert Beale admitted the Welsh region could not compete financially with what 24-year-old Lydiate had been offered elsewhere. "We are obviously very disappointed that Danny has decided to leave the Dragons," Beale said. "He has been a key part of our set-up for several years and is popular with both the players and the coaches.

"I can assure our supporters that we did all that we could to retain Dan's services, but we simply cannot compete with the offers which have been put on the table."

The news will come as a further blow to the Welsh regional set-up with Wales centre Jamie Roberts recently confirming that he will leave the Blues at the end of the season. It seems likely that both players will follow the current trend and head to France.

Several of the current Wales squad, including Lydiate's former Dragons colleague Luke Charteris, scrum-half Mike Phillips, prop Gethin Jenkins and utility back James Hook, ply their club trade in France. There have been issues, though, with player availability for international fixtures.

The Wales management were able to reach agreement with Perpignan for Charteris to play against Australia last weekend, although in return he missed the autumn opener against Argentina, while Hook and Bath prop Paul James were unavailable for the Wallabies fixture.